Publications

For content on fallback contract language for new contracts that reference USD LIBOR, see the Fallback Contract Language tab.


October 15, 2020
This set of frequently asked questions, which is updated from time to time to reflect developments, provides information about the work of ARRC, its progress to date and the overall effort to promote voluntary market adoption of its recommended alternative to USD LIBOR, the SOFR.

ARRC previously issued a press release when the frequently asked questions were initially published on September 20, 2018. The ARRC has since updated this document on an ongoing basis.
October 14, 2020
On October 14, the ARRC updated its FAQs to its Request for Proposals (RFP) that was published in September 2020 seeking a potential administrator to publish forward-looking SOFR term rates. This follows the publication of the ARRC's 2020 Objectives, which aimed to establish an RFP process to select a recommended administrator of forward-looking term SOFR rates, to be published in the first half 2021 if liquidity in SOFR derivatives markets has developed sufficiently.

Submitting Responses to the RFP
Questions and responses to the RFP should be sent to the ARRC Secretariat at arrc@ny.frb.org by October 31, 2020. Please provide only one response per institution, and please attach your responses in a PDF document with "Forward-Looking Term Rates RFP Response" clearly indicated in the subject line of your email.

The ARRC will evaluate responses and will require selected firms to present their proposals. Following an ARRC selection, the ARRC will publish the name of the chosen recommended administrator. The recommended administrator must be prepared to begin publication of the forward-looking term rates by June 30, 2021.
October 9, 2020
On October 9, the ARRC released FAQs to its Request for Proposals (RFP) that was published in September 2020 seeking one or more firms to publish daily indicative spreads and, after a trigger event has occurred, static spreads and spread-adjusted fallback rates for cash products that transition away from U.S. dollar (USD) LIBOR. These spread-adjusted fallback rates will be based on the Secured Overnight Financing Rate (SOFR). They are designed for use in legacy contracts with the ARRC's recommended hardwired fallback language, and other instances where spread-adjusted replacement rates are needed.

Submitting Responses to the RFP
Questions and responses to the RFP should be sent to the ARRC Secretariat at arrc@ny.frb.org by October 16, 2020. Please provide only one response per institution, and please attach your responses in a PDF document with "Spread Adjustment RFP Response" clearly indicated in the subject line of your email.

The ARRC will evaluate responses and will require selected firms to present their proposals. Following an ARRC selection, the ARRC will publish the name(s) of the chosen administrator(s) .
September 11, 2020
The ARRC released an addendum to its recommendations that a voluntary exchange of cash compensation take place between counterparties to legacy swaptions referencing USD LIBOR and that counterparties specify an agreed discount rate using the SOFR for new swaptions expiring after October 16, 2020. The recommendation of voluntary compensation is intended to resolve uncertainty associated with the transition from the use of the Effective Federal Funds Rate to the SOFR for discounting cleared derivatives.

In making a recommendation, the ARRC incorporated feedback received on its public consultation on this matter, which received responses from more than 30 sell-side and buy-side market participants.
September 4, 2020
The ARRC submitted a request for guidance concerning the transition to SOFR discounting with respect to a vast number of existing financial contracts that currently use the effective federal funds rate as the discount rate. This transition is a critical step in the ARRC's Paced Transition Plan, and the ARRC plans to request that Treasury and IRS expand the IBOR transition guidance to cover such discounting transition.
September 3, 2020
On September 3, 2020 the ARRC updated its recommended Best Practices that were initially published in May 2020. The Best Practices aim to clarify the timelines and interim milestones that the ARRC believes are appropriate for transitioning away from USD LIBOR in a way that will minimize market disruption and support a smooth transition through the broad voluntary adoption of the SOFR.

They were adjusted in September 2020 following the publication of updates to bilateral business loan fallback language. In order to reflect that publication, the ARRC has updated its Best Practice recommendations to state that new bilateral business loans should incorporate hardwired or hedged fallback language by October 31, 2020. The recommendation for new syndicated business loans to incorporate hardwired fallback language by September 30, 2020 remains unchanged.

The Best Practices also include an accompanying fact sheet.
August 19, 2020
On August 19, 2020 the ARRC updated its recommended best practices that were initially published on May 27, 2020. The best practices aim to clarify the timelines and interim milestones that the ARRC believes are appropriate for transitioning away from USD LIBOR in a way that will minimize market disruption and support a smooth transition through the broad voluntary adoption of the SOFR. They were updated in August to recommend that a subset of derivatives market participants adhere to the International Swaps and Derivatives Association (ISDA)'s upcoming IBOR Fallback Protocol as promptly as possible. The best practices also include an accompanying fact sheet.
August 18, 2020

The ARRC released guides to support the transition away from USD LIBOR. The LIBOR ARM Transition Resource Guide focuses on LIBOR-based adjustable rate mortgages, including home equity products. The Legacy LIBOR-Based Private Student Loan Transition Resource Guide focuses on LIBOR-based variable rate private student loans that will exist after LIBOR's anticipated discontinuance after end-2021.

August 10, 2020

ARRC Chair Tom Wipf sent a letter to ARRC Members urging them to be prepared to sign onto the International Swaps and Derivatives Association's (ISDA) IBOR Fallback Protocol, consistent with the ARRC's recommended Best Practices. Adherents to the Protocol will agree that existing derivative transactions that they have entered into with other adherents will incorporate ISDA's new fallback language.

August 7, 2020

The released the SOFR Starter Kit, a set of factsheets to inform the public about the transition away from USD LIBOR to SOFR. The SOFR Starter Kit aims to help anyone impacted by the transition quickly familiarize themselves with the history and core issues involved in transitioning. It is segmented into three parts:

July 23, 2020

The ARRC has filed a letter with the CFTC's Division of Clearing and Risk (DCR), Division of Market Oversight (DMO), and Division of Swap Dealer and Intermediary Oversight (DSIO) requesting modifications to the existing IBOR no-action relief previously granted by such divisions in CFTC Letters 19-26, 19-27 and 19-28. These requests are summarized in an issues list (the ARRC Issues List) submitted along with the letter.

While the ARRC believes the existing no-action letters address many of the regulatory issues in the transition, certain modifications have been requested to further ensure a smooth and orderly transition away from LIBOR and other IBORs. One of these requests for DCR—regarding the rates covered by the DCR no-action letter—is an important clarification required for the ISDA 2020 IBOR Fallbacks Protocol, which will facilitate the amendment of swaps to include "Fallback Amendments."

The ARRC previously submitted a letter requesting that DSIO modify its relief to address the implications of certain discount rate changes at derivatives clearing organizations, as well as amendments to credit support annexes. The ARRC continues to request these modifications, which are reiterated in the ARRC Issues List.

July 22, 2020
The ARRC released conventions related to using the Secured Overnight Financing Rate (SOFR) in arrears, both daily simple SOFR and daily SOFR compounded in arrears, in syndicated loans. The conventions follow the ARRC's 2020 Objectives, which identified the publication of recommended conventions and supporting materials for syndicated loans as a priority milestone for the year, as well as the ARRC's revised Hardwired Fallbacks for Syndicated Loans, which were published on June 30, 2020.
July 10, 2020
The ARRC previously requested that the IRS and Treasury issue a non-regulatory relief facilitating adherence to the ISDA Protocol, and requested that such relief also covers bilateral contract modifications. At the request of the IRS and Treasury, the ARRC submitted an additional email explaining a technical aspect of the request to accommodate limited bilateral changes to the ISDA Protocol.
July 8, 2020
In recognition of the complexity that the LIBOR transition presents for firms' internal systems, the ARRC has identified processes and systems that may be affected and their dependencies. Today the ARRC has released a taxonomy that firms can use to structure their transition away from LIBOR. This document can be an important aid for firms planning for the transition and fills in many of the details that have been outlined in earlier ARRC publications, beginning with the User's Guide to SOFR and including the Practical Implementation Checklist and Buy-Side Checklist.
June 30, 2020
The ARRC released conventions for how market participants can voluntarily use SOFR in new student loan products. The conventions recommend that SOFR-based student loan products reference the 30- or 90-day SOFR Average, with a monthly or quarterly reset period, respectively, with rates determined before the interest period, and a margin set by the lender or originator. The ARRC believes this recommendation aligns well with current practices and with lenders, servicers, borrowers, and investors’ expectations for a vibrant market for the foreseeable future.
June 17, 2020
The ARRC has filed a letter with the CFTC's Division of Swap Dealer and Intermediary Oversight ("DSIO") that requests that staff:

(i) grant no-action relief providing that the exchange of voluntary compensation for a swaption, or the amendment of a swaption's terms to reflect an agreement regarding the discount rate that will be used by a derivatives clearing organization ("DCO") in advance of the DCO's discounting changes would be treated as a "Qualifying Amendment" under DSIO's existing IBOR relief letter (CFTC Letter 19-26) and that therefore such actions would not result in the swap being newly subject to the regulatory requirements covered by CFTC letter 19-26; and

(ii) clarify that CSA amendments would not trigger the regulatory requirements covered by CFTC letter 19-26.

The ARRC recently released recommendations for swaptions affected by the CCP discounting transition to SOFR. Among other actions, the ARRC recommended that market participants amend their legacy swaptions to bring them in scope for ISDA Supplement 64. Additionally, as part of its Best Practice recommendations, the ARRC recommended that market participants amend interdealer CSAs to use SOFR for U.S. dollar collateral by the end of this year.

The ARRC is cognizant that the desire for clarity around related regulatory impacts may be a factor impacting the ability of market participants to agree to an amendment of their swaption positions or of their CSA. In order to achieve this clarity, the ARRC has requested that the CFTC consider these actions.
June 3, 2020
The Chair of the ARRC's Accounting and Tax Working Group released a letter to the Securities and Exchange Commission (SEC) which confirmed that they do not object to the Alternative Reference Rate Committee's Accounting and Tax Subgroup's conclusions that the SOFR interest rate reset features evaluated in the letter are terms of the host contract and do not represent embedded derivatives that require further assessment for bifurcation under ASC 815 based on the specific facts and circumstances described in the ARRC's letter dated April 20.
May 7, 2020
The ARRC released recommended best practices for technology and operations vendors relevant to the transition. The document calls on these vendors to complete all remaining enhancements to their product offerings that are necessary to support SOFR and outlines dates after which no new LIBOR-based activity should be conducted.
May 7, 2020
The ARRC released responses to a vendor readiness survey that was issued on January 31, 2020. The survey aims to help software and technology vendors assess their readiness to transition to SOFR. The survey also serves as a platform for vendors to raise operational issues to the ARRC.

The ARRC continues to take in responses to Section I of the survey and encourages more vendors to respond.

Submitting Responses
As noted in the letter that accompanies the survey, the ARRC asks vendors to input responses to Section I in the spreadsheet, and submit the spreadsheet by email to the ARRC Secretariat (arrc@ny.frb.org). Please do not submit any responses to Section II. Indicate "Vendor Survey" in the subject line of your email, and provide only one response per institution.

Webcast Details
ARRC representatives hosted a webcast on Monday, February 10, 2020 to answer vendors' questions. A recording of the webcast can be viewed via this link.
May 6, 2020
The ARRC issued a supplemental consultation seeking further views on certain technical issues related to spread adjustment methodologies for cash products referencing U.S. dollar (USD) LIBOR. This consultation builds on the feedback the ARRC has received on its original consultation on potential spread adjustment methodologies issued in January 2020 and includes a summary of feedback received to date on the initial consultation.

Submitting Feedback About This Consultation
The ARRC welcomes responses to the supplemental consultation from the widest possible range of stakeholders. The release of the consultation marks the start of a public comment period during which the ARRC intends to work closely with stakeholders to solicit and incorporate their input. Following this comment period, the ARRC will release a more detailed final recommendation of the spread adjustment methodology for cash products.

Market participants may submit responses to the consultation questions by email to the ARRC Secretariat (arrc@ny.frb.org) no later than June 8, 2020. Please provide only one response per institution, and please attach your responses in a PDF document with "Supplemental Consultation Response" clearly indicated in the subject line of your email. Comments will be posted on the ARRC's website as they are received without alternation, expect when necessary for technical reasons, and with attribution, unless respondents request anonymity. If your institution is requesting anonymity, please clearly indicate this in the body of your email and please ensure that the PDF document you submit is anonymized.

Questions regarding the consultation should be sent to the ARRC Secretariat (arrc@ny.frb.org) and will not be posted for attribution.
May 6, 2020
The ARRC’s Floating Rate Notes Working Group released a statement to provide market participants with information about how the New York Fed’s published SOFR Index may be referenced in floating rate notes. The statement includes structuring considerations as well as a sample term sheet for floating rate notes referencing the SOFR Index.
April 24, 2020
The Chair of the ARRC's Accounting and Tax Working Group sent a letter to the Securities and Exchange Commission (SEC) regarding accounting issues associated with certain embedded derivatives in connection with the transition to SOFR. The letter was accompanied by an appendix.
April 17, 2020
The ARRC's key objectives for 2020 aim to advance the group's work and mission. These goals and anticipated milestones build on the ARRC's existing work and underscore the important progress that the ARRC has made toward achieving market readiness and supporting the voluntary adoption of the Secured Overnight Financing Rate (SOFR), the ARRC's recommended alternative to U.S. dollar (USD) LIBOR.
April 17, 2020
The ARRC conducted a webinar to provide an in-depth overview of the proposal for New York State legislation, which was released on March 6, 2020. The proposal is intended to minimize legal uncertainty and adverse economic impacts associated with the LIBOR transition. The ARRC is releasing these materials to promote broader engagement on the proposal.
March 27, 2020
The ARRC released a consultation on U.S. Dollar (USD) LIBOR fallback contract language for new variable rate private student loans. This consultation outlines draft language for new contracts that reference USD LIBOR to minimize risks in the event that LIBOR is no longer usable.

Submitting Feedback about Consultations
The ARRC is seeking feedback on each proposed approach and on the key issues involved from the widest possible range of stakeholders. The release of these consultations marks the start of a public comment period, during which the ARRC intends to work closely with stakeholders in these markets, including issuers, intermediaries, and end users, to solicit and incorporate their input. The consultations include multiple questions about each aspect of the potential fallback provisions.

Comments should be sent to the ARRC Secretariat (arrc@ny.frb.org) no later than May 15, 2020. Comments will be posted on the ARRC’s website after the close of the consultation period without alteration except when necessary for technical reasons. Comments will be posted with attribution unless respondents request anonymity. If your institution is requesting anonymity, please clearly indicate this in the body of your email and please ensure that the PDF document you submit is anonymized. Questions regarding the consultations should also be sent to the ARRC Secretariat (arrc@ny.frb.org) and will not be posted for attribution.
March 24, 2020
The ARRC sent a letter to the U.S. Treasury Department and the Internal Revenue Service about the proposed regulations regarding guidance on the IBOR transition. The letter describes the proposed regulations as “comprehensive” and “addressing most of the concerns raised by the ARRC in a manner that gives significant flexibility to taxpayers seeking to transition away from IBORs.” In the letter, the ARRC provided a number of recommendations intended to facilitate market participants’ ability to rely on the proposed regulations as they act to transition legacy IBOR contracts.
January 31, 2020
The ARRC released a buy-side checklist, which outlines the steps for an effective shift to SOFR, and is designed to be used alongside the User's Guide to SOFR. It is similar to the practical implementation checklist released in 2019, but is more narrowly intended for use by buy-side firms.
January 24, 2020
The ARRC released final recommendations for new interdealer cross-currency basis swaps that use the Secured Overnight Financing Rate (SOFR) and overnight risk-free rates (RFRs) recommended by National Working Groups (NWGs) in other jurisdictions. The conventions outlined in this document are for market participants’ voluntary use.
December 11, 2019
The chair of the ARRC's Tax Subgroup released a letter requesting IRS and Treasury guidance regarding the anticipated International Swaps and Derivatives Association Protocol relating to Interbank Offered Rate ("IBOR") fallback provisions. Subsequently, the ARRC's Tax Subgroup counsel submitted a follow-up letter to the IRS and Treasury on December 20, 2019, to provide examples of bilateral amendments and to highlight additional issues that should be considered in the interim guidance relating to the Protocol. The Subgroup also submitted an additional follow-up letter on January 30, 2020.
December 11, 2019
The ARRC released a comment letter to the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Reserve Deposit Insurance Corporation, the Farm Credit Administration, and the Federal Housing Finance Agency (together, the "Agencies") in response to the Agencies' notice of proposed rulemaking regarding margin and capital requirements for covered swap entities. Consistent with the ARRC's mandate, the ARRC's comment letter focuses on the provisions of the proposed rule designed to facilitate an orderly transition away from interbank offered rates. The ARRC released a supplemental comment letter on February 13, 2020 that addresses swaption transactions.
December 6, 2019
The Chair of the ARRC's Accounting and Tax Working Group released a letter to the Securities and Exchange Commission (SEC) that sets out the ARRC's understanding that the SEC staff does not object to the conclusions that certain amendments to preferred shares would be accounted for as a modification, rather than an extinguishment, and that such a modification would not result in the recognition of an exchange of value.
November 21, 2019
The Matrix linked above identifies considerations relevant to using SOFR in new floating rate notes (FRNs) and the Appendix includes SOFR FRN term sheets and fallback language. The Comparison Chart highlights key differences of structures used in the market. These documents were developed to help market participants as they consider issuing or investing in SOFR-based FRNs and may be updated or supplemented periodically. The Matrix and Comparison Chart were issued on August 1, 2019, while the Appendix was issued on November 21, 2019.
November 6, 2019
The ARRC released a letter to the Commodity Futures Trading Commission regarding regulatory issues associated with the transition of derivatives contracts from interbank offered rates to alternative risk-free benchmarks. The letter updates and consolidates earlier letters from the ARRC to the CFTC requesting regulatory clarification on the same subject.
October 8, 2019
ARRC, in conjunction with Securities Industry and Financial Markets Association (SIFMA), submitted a comment letter in response to Financial Accounting Standards Board's (FASB) Exposure Draft on reference rate reform. The letter is also available here.
September 19, 2019
ARRC released a practical implementation checklist to help market participants transition to using the Secured Overnight Financing Rate (SOFR), which is the ARRC's recommended alternative to U.S. dollar (USD) LIBOR.
August 15, 2019
ARRC released a letter to the U.S. Securities and Exchange Commission (SEC) requesting confirmation that preferred stock instruments that reference LIBOR qualify for the same relief that the Financial Accounting Standards Board (FASB) has proposed for other contracts referencing interbank offer rates (IBORs), including LIBOR.
July 11, 2019
ARRC's Consumer Products Working Group developed this white paper detailing how an average of the Secured Overnight Financing Rate (SOFR) can be used in newly issued adjustable-rate mortgages (ARMs) in a structure that is comparable to today's existing ARM loans. A one-page summary of the white paper can be found here.
July 10, 2019
ARRC released guiding principles for the development of fallback contract language for consumer products and defined the scope of work for its Consumer Products Working Group. While the Consumer Products Working Group is relying on many of the lessons learned by the ARRC's other working groups that developed recommended fallback language this year for market participants' voluntary use in a range of cash products, this Group's work also faces a unique set of circumstances that require additional consideration given that stakeholders include retail consumers.
June 24, 2019
This report details preliminary considerations for the use of risk-free rates (RFRs) in interdealer cross-currency swaps.
June 6, 2019
Following the ARRC's letter to the U.S. Treasury requesting guidance on tax issues that arise as a result of the market transition from LIBOR and other Interbank Offered Rates, the ARRC submitted these documents to the U.S. Treasury with proposals to further address some of the tax concerns highlighted in the letter.
June 6, 2019
This document complements the ARRC's Paced Transition Plan by outlining key priorities and milestones in 2019 to support and prepare market participants for the transition.
May 16, 2019
ARRC released a follow-up to its July 2018 letter to U.S. regulators regarding regulatory issues associated with the transition of derivatives contracts from interbank offered rates to alternative risk-free benchmarks. The follow-up letter responds to regulators’ requests by describing different models market participants may use to effect the transition, and also requests that new derivatives linked to SOFR and other alternative rates that are not subject to mandatory clearing be exempt from initial margin requirements for a limited amount of time in order to build liquidity in the market. Note that while the letter published here is addressed to the CFTC, identical letters were sent to all of the U.S. regulatory addressees with only the addressee and regulator name changed.
April 29, 2019
This document highlights progress made since the Federal Reserve Bank of New York, in collaboration with the Office of Financial Research, began daily publication of the SOFR in 2018.
April 22, 2019
ARRC released a white paper to help explain how market participants can use its recommended alternative to U.S. dollar LIBOR, the Secured Overnight Financing Rate (SOFR), in cash products. This paper builds on the ARRC’s work developing the Paced Transition Plan, which outlines the steps for an effective shift to SOFR.
April 11, 2019
ARRC released a letter requesting guidance on tax issues that arise as a result of the market transition from LIBOR and other Interbank Offered Rates to alternative risk-free rate benchmarks.
July 16, 2018
ARRC released a letter requesting inter-agency guidance regarding the treatment of derivatives contracts referencing alternative risk-free rate benchmarks and associated transitions from interbank offered rates under the Title VII of the Dodd-Frank Act and associated regulations.
March 5, 2018
This report summarizes the choice of the Secured Overnight Financing Rate (SOFR) as its recommended alternative to USD LIBOR and enhancing the ARRC's Paced Transition Plan seeking to promote the use of SOFR on a voluntary basis.
May 20, 2016
This report summarizes the ARRC's progress in narrowing the set of potential rates that might be chosen as an alternative to USD LIBOR and in considering potential plans for transition to the chosen rate.